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Tuesday, April 15, 2008

Le Meridien expects growth to stay

For the past two-and-a-half years, Le Meridien Kuala Lumpur has put in a lot of efforts building its brand and has today emerged as a leading five-star hotel in the capital.

The 420-room hotel, which turns four in October this year, has grown both its average room rate (ARR) and revenue to a level that has put to rest all criticisms and concerns by industry observers on its marketing strategies and performance.

"We ended 2005 at an ARR of RM200 and we expect to close 2008 at an ARR of RM400 ... our revenue was RM40 million in (2005) and we expect RM80 million this year," general manager Martyn Standen said in an interview with Business Times.

"The outlook for the year is good as we know who we are, we know how to work with Hilton (adjoining neighbour), and we know how to take care of our corporate accounts and win new businesses," he said.

Standen said that hotel owner Daito Asia Development Sdn Bhd is in fact enjoying a return on investment, which is higher than a bank's return here.

Daito owns both Le Meridien and Hilton Kuala Lumpur located in KL Sentral.

Standen acknowledged that in the past Le Meridien had to play catch-up with Hilton, which has had a longer history and brand awareness in Malaysia.

"It was like the tortoise and hare (race). Our neighbour (Hilton) was certainly the hare and we were the tortoise. But since then, we have discovered some extra legs," he added.

The changes in management, support from its new owner Starwood and its location which is 28 minutes from the KL International Airport in Sepang, have lent further support in lifting its image.

Le Meridien saw ARR improve to RM350 last year, from RM276 in 2006.

Despite the increase in room rates, the hotel continued to maintain its occupancy at a healthy level of between 72 per cent and 75 per cent.

Some 60 to 65 per cent of its occupants are business guests, 10 per cent leisure and the balance are groups comprising corporate and leisure travellers.

Le Meridien's room to food and beverage revenue is split 62-38 per cent. The latter has improved from a 25 per cent contribution, following a US$2 million (RM6.4 million) investment that involved the introduction of Prime, its steak house and Latest Recipe.

Next year, Le Meridien hopes to grow its ARR by another 25 per cent to touch the RM500 mark.

"We have been increasing at 25 per cent over the last three years and anticipate that going into 2009 we would probably continue to do that," he said.

By New Straits Times - Business Times - (by Vasantha Ganesan)

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